ANJALI A. MALPANI, MUMBAI V. DCIT - CC- 3(2), MUMBAI

ITA 3917/MUM/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9541 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reassessment proceedings; Set aside; Capital Gains
• Section: 147; 148; 132; 271(1)(c); 143(3); 153A; 69A; 153; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI SHRI PRAMOD KUMAR, VICE PRESIDENT SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 3924 /MUM/2019 (Assessment Year: 2010-11) ITA No. 3925 /MUM/2019 (Assessment Year: 2011-12) ITA No. 3926 /MUM/2019 (Assessment Year: 2012-13) ITA No. 3927 /MUM/2019 (Assessment Year: 2013-14) ITA No. 3928/MUM/2019 (Assessment Year: 2014-15) Aniruddha Narayan Malpani, 603, 6 th Floor, Jamuna Sagar, Shahid Bhagat Singh Road, Near Colaba Bus Station, Mumbai - 400005 [PAN: AACPM9738M] DCIT-Central Circle-3(2), Mumbai, Room No. 1913, 19 th Floor, Air India Building, Nariman Point, Mumbai - 400021 ................ Vs ................ Appellant Respondent ITA No. 4120/MUM/2019 (Assessment Year: 2011-12) ITA No. 4122/MUM/2019 (Assessment Year: 2013-14) ITA No. 4123/MUM/2019 (Assessment Year: 2014-15) DCIT CC 3(2), Central Range-3, Room No. 1913, Air India Building, Nariman Point, Mumbai - 400021 ................ Appellant ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 2 Aniruddha Narayan Malpani, 6 th Floor, Jamuna Sagar Building, SBS Road, Colaba, Mumbai - 400005 [PAN: AACPM9738M] Vs ................ Respondent ITA No. 3917/MUM/2019 (Assessment Year: 2010-11) ITA No. 3918/MUM/2019 (Assessment Year: 2011-12) ITA No. 3919/MUM/2019 (Assessment Year: 2012-13) ITA No. 3920/MUM/2019 (Assessment Year: 2013-14) ITA No. 3921/MUM/2019 (Assessment Year: 2014-15) Dr. Anjali Aniruddha Malpani, 603, 6 th Floor, Jamuna Sagar, Shahid Bhagat Singh Road, Near Colaba Bus Station, Mumbai - 400005 [PAN: AAHPM0693E] DCIT-Central Circle-3(2), Mumbai, Room No. 1913, 19 th Floor, Air India Building, Nariman Point, Mumbai - 400021 ................ Vs ................ Appellant Respondent ITA No. 4114/MUM/2019 (Assessment Year: 2010-11) DCIT CC 3(2), Central Range-3, Room No. 1913, Air India Building, Nariman Point, Mumbai - 400021 Dr. Anjali Aniruddha Malpani, 6 th Floor, Jamuna Sagar Building, SBS Road, Colaba, Mumbai - 400005 [PAN: AAHPM0693E] ................ Vs ................ Appellant Respondent ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 3 Appearances For the Appellant/Assessee For the Respondent/Department : : Shri Hiro Rai Shri Dharan Gandhi Shri Rakesh Garg Date of conclusion of hearing Date of pronouncement of order : : 11.08.2022 30.09.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. This is batch of 14 appeals/cross-appeals for Assessment Years 2010-11 to 2014-15 pertaining to two assessees, namely Dr. Aniruddha Narayan Malpani and Dr. Anjali Aniruddha Malpani, both, being doctors by profession holding post of director and involved in the control & management of Malpani Infertility Clinic Private Limited (hereinafter referred to as „the Company‟) a private limited company. For all the assessment years before us, the assessments were framed on both the assessees under Section 153C read with Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as „the Act‟] sequent to a search conducted on the Company under Section 132 of the Act on 26.11.2015. These appeals were heard together as they involved identical issues arising from common factual matrix and are, therefore, being disposed by way of common order. ITA No. 3924/Mum/2019 (Assessment Year 2010-11) filed by the Assessee (Dr. Aniruddha Narayan Malpani) 2. By way of the present appeal the Assessee (i.e. Dr. Aniruddha Narayan Malpani) has challenged the order, dated 29.03.2019, passed by the Commissioner of Income Tax (Appeals)-51, Mumbai [hereinafter referred to as „the CIT(A)‟] for the Assessment Year 2010-11 partly allowing the appeal filed by the ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 4 Assessee against the Assessment Order, dated 27.12.2017 for the Assessment Year 2010-11. 3. The Assessee has raised the following grounds of appeal: “1. In the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. Assessing Officer in initiating the proceedings u/s 153C of the Income-Tax Act, 1961, without satisfying the conditions laid down therein. 1.1 Without prejudice to the above, the Ld. CIT(A) erred in stating that the assessee is convinced that there is no infirmity in the notice issued u/s 153C of the Act. 2. In the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in not treating the proceedings u/s 153C as well as the order u/s 143(3) r.w.s. 153C as bad in law and thereby not quashing it. 3. In the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in not accepting the argument that no additions could have been made to the income of the assessee as no incriminating material pertaining to the assessee was found during the course of search. 3.1 Without prejudice to the above, the Ld. CIT(A) erred in stating that incriminating statements are also incriminating material without pointing out as to what statement of the assessee was incriminating or adverse qua the additions made during the year under consideration. 4. In the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO in treating the short term capital gain of Rs. 53,05,487/- as business income. The reasons given in this regard are patently erroneous and unjustified. 4.1 Without prejudice to the above, the Ld. CIT(A) has erred in relying upon certain judgments of the Courts without ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 5 putting it to the assessee and which are in fact, not applicable to facts of the present case. 4.2 Without prejudice to the above, the Ld. CIT(A) has erred in not allowing deductions of various expenditure incurred like, portfolio management charges, STT and other expenses as deduction while computing the business income. 5. The Ld. CIT(A) erred in upholding the levy of interest u/s 234B and 234C of the Act. 6. The Ld. CIT(A) erred in not setting aside the action of the Ld. AO in initiating penalty proceedings u/s 271(1)(c) of the Act. 7. The appellant craves leave to add, to amend, alter/delete and/or modify the above grounds of appeal on or before the final hearing.” 4. Brief facts of the case are that the Assessee, a doctor by profession, filed return of income for the relevant assessment year on 30.07.2010 declaring total income of INR 1,55,03,435/. Subsequently, a search was conducted under Section 132 of the Act on 26.11.2015 at Malpani Infertility Clinic Private Limited (hereinafter referred to as „the Company‟). During the aforesaid search on the Company jewellery of INR 90,51,925/- was found out of which jewellery of INR10,17,015/- was seized. 5. Notice, dated 03.10.2017 was issued to the Assessee under Section 153C of the Act. In response to the aforesaid notice, the Assessee submitted that the original return filed by the Assessee be treated as returned filed in response to notice under Section 153C of the Act. Assessment under Section 153C read with Section 143(3) of the Act was framed on the Assessee vide order, dated 27.12.2017, determining total income of the ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 6 Assessee at INR 1,82,59,890/- after treating Short Term Capital Gain of INR 53,05,487/- and Long Term Capital Loss of INR 23,50,550/- arising from share transactions as business income/loss. No addition was made in the hands of the Assessee in respect of jewellery found/seized during the course of search in the Company. 6. Being aggrieved, the Assessee preferred appeal before CIT(A) challenging the initiation of proceedings under Section 153C of the Act on the ground of lack of satisfaction recorded before initiating proceedings under Section 153C of the Act and incorrect exercise of jurisdiction by the Assessing Officer to frame assessment under Section 153C of the Act in absence of any incriminating material. The Assessee also challenged the additions made by the Assessing Officer on merits claiming that the characterization/quantification of capital gain/loss as business income/loss by the Assessing Officer was erroneous and patently illegal. The CIT(A), vide order dated 29.03.2019 partly allowed appeal of the Assessee. The CIT(A) granted some relief to the Assessee on merits by treating the loss of INR.23,50,550/- arising from transactions in shares with a holding period of more than one year as Long Term Capital Loss. Rest of the contentions raised by the Assessee were rejected. 7. Being aggrieved by the order passed by the CIT(A), the Assessee has preferred the present appeal raising grounds reproduced in paragraph 2 above. 8. The Ld. Authorised Representative for the Assessee appearing before us submitted that recording of proper satisfaction is the prerequisite for initiation of proceedings under Section 153C of ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 7 the Act. The Assessing Officer must record satisfaction that the material seized during the course of the search belongs to person other than the searched person, and that such material has a bearing on the determination of the income of the other person. Learned Authorised Representative for the Assessee submitted that the Assessing Officer is stated to have recorded satisfaction on 03.10.2017 that material seized during searched (i.e., jewellery) belonged to the Assessee and yet, a month later, on 03.11.2017, the Assessing Officer had sought for explanation from the Company regarding the same jewellery which goes on to show that on 03.10.2017 the Assessing Officer was not satisfied that the jewellery seized during the search action belonged to the Assessee. Learned Authorised Representative for the Assessee further submitted that Section 153C of the Act requires that the Assessing Officer should be satisfied that the asset seized has a bearing on the total income of the six assessment years preceding the year of search. Since the Assessing Officer had no evidence to suggest that the jewellery found/seized had a bearing on the determination of any specific assessment year, the aforesaid condition was not satisfied and therefore, the satisfaction recorded in terms of Section 153C of the Act is bad in law making the entire proceedings and the assessment order a nullity in law. To support the aforesaid contention, the Learned Authorised Representative for the Assessee referred to the provisions of Section 69A of the Act and submitted that in the fact of the present case the Assessing Officer could have only made additions in the year of search in case the Assessee had failed to provide explanation regarding source of jewellery. Highlighting the fact that the addition on account of unexplained portion of jewellery was made in the ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 8 hands of the Company and not in the hands of Assessee, the Learned Authorised Representative for the Assessee moved to the next leg of his argument. Relying upon the judgments of the Hon‟ble Bombay High Court in the case of Hindustan Lever Ltd. Vs. ACIT: 268 ITR 332 (Bom) rendered in the context of reopening of assessment under Section 147/148 of the Act, he submitted that nothing can be added or deleted from the satisfaction recorded. Since no additions have been made qua the item for which satisfaction was recorded by the Assessing Officer under Section 153C of the Act, the jurisdictional basis of invoking the provisions of Section 153C of the Act crumbles and therefore, notice issued under Section 153C of the Act, the assessment proceedings as well as the assessment order passed under Section 153C read with Section 143(3) of the Act must be quashed. In this regard, Learned Authorised Representative for the Assessee relied upon the decision of the Hon‟ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd.: 331 ITR 236 wherein it was held that when no addition has been made qua any of the item for which reasons were recorded for reopening the assessment under Section 147 of the Act, no further additions can be made in the reassessment proceedings and therefore, the reassessment fails. On the strength of the aforesaid judgment, the Ld. Authorised Representative for the Assessee submitted that the ratio of the aforesaid judgment is equally applicable to proceedings under Section 153C of the Act. Since in the facts of the present case no addition was made on account of unexplained portion of jewellery found/seized during the search proceedings in the hands of the Assessee, the satisfaction recorded should be held ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 9 to be invalid and the assessment order under Section 153C read with Section 143(3) of the Act must be quashed. 9. Per contra, Ld. Departmental Representative vehemently contended that the search proceedings and the culmination thereof in the assessment order passed under Section 153C read with Section 143(3) of the Act were as per law and cannot be quashed in the facts and circumstances of the present case. He submitted that Section 132 of the Act uses the expression „reasons to believe‟ and therefore, there is no requirement of forming „satisfaction‟ for undertaking search action under Section 132 of the Act. Even if there are „reasons to suspect‟, the search action under Section 132 of the Act can be conducted. He submitted that provisions of Section 153C are separate are distinct from provisions of Section 147 of the Act and in this regard he relied upon non-obstante clause contained in Section 153C of the Act to contend that since the provisions of Section 147 of the Act do not apply to proceedings under Section 153C of the Act, the judicial precedents pertaining to Section 147 of the Act, which were relied upon by the Ld. Authorised Representative for the Assessee, cannot be applied to proceedings under Section 153C of the Act. 10. Responding to the submissions advanced by the Ld. Departmental Representative, the Ld. Authorised Representative for the Assessee submitted that „reasons to suspect‟ pose a lighter burden on the Revenue as compared to „reasons to believe‟ or „satisfied‟. Nothing prevented the legislature from using expression „reasons to suspect‟ in Section 153C of the Act instead of „satisfied‟. In this regard, he relied upon the judgment of Hon‟ble Bombay High Court in the case of ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 10 German Remedies Ltd. vs. DCIT : 287 ITR 494 rendered in the context of reopening of the assessment under Section 147 of the Act. He further submitted that the Ld. Departmental Representative has misplaced reliance on non-obstante clause contained in Section 153C of the Act which only provides that once a search was conducted there was no requirement to resort to the provisions of Section 147 of the Act as the Assessing Officer was free to undertake proceedings under Section 153A to 153D of the Act. 11. We have considered the rival submissions, perused the material on record and considered the legal position. It is admitted position that a search under Section 132 of the Act was carried out on 26.11.2015 on the Company. In the course of the search jewellery of INR 90,51,925/- was found out of which only jewellery of INR 10,17,015/- was seized. After recording satisfaction vide satisfaction note, dated 03.10.2017, the Assessing Officer proceeded to issue notice under Section 153C of the Act to the Assessee for the Assessment Years 2010-11 to 2015-16. After taking into consideration the contentions raised by the Assessee during the assessment proceedings, the Assessing Officer completed the assessment for the Assessment Year 2010-11 vide order dated 27.12.2017 at total income of INR 1,82,59,890/-. Before the CIT(A), the Assessee challenged the proceedings under Section 153C read with Section 143(3) of the Act on the ground that no satisfaction was recorded prior to the issuance of notice under Section 153C of the Act. The CIT(A) had, vide letter dated 19.11.2018, sought for the satisfaction recorded from the Assessing Officer and in response to the same, the Assessing Officer, vide letter dated 20.12.2018, furnished the satisfaction note recorded on 03.10.2017. Thus, it ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 11 is clear that satisfaction was recorded before issuance of notice under Section 153C of the Act. In proceedings before us the Ld. Authorised Representative for the Assessee has challenged the satisfaction recorded on the ground that it is not proper and/or bad in law and therefore, we proceed to examine the same. 12. As per Section 153C of the Act notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153 of the Act, where the assessing officer of searched person is satisfied that, inter alia, any jewellery or other valuable article or thing seized, belongs to a person, other than the searched person referred to in Section 153A of the Act (hereinafter referred to as „the Other Person‟), then, the same shall be handed over to the assessing officer having jurisdiction over the Other Person (hereinafter referred to as „the Assessing Officer‟). The Assessing Officer receiving the aforesaid asset shall then issue notice and assess/reassess the income of the Other Person in accordance with the provisions of Section 153A of the Act provided the Assessing Officer is satisfied that the assets seized has a bearing on the determination of the total income of the Other Person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted and for the relevant assessment year or years referred to in Section 153A (1) of the Act. At the threshold, satisfaction that is required to arrive at is that the seized material belongs to the Other Person and that it has a bearing on determination of total income of the 6 assessment years preceding the year of search. In our view, the satisfaction arrived at the threshold by the Assessing Officer cannot be equated to the final determination to be made after going ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 12 through the assessment/reassessment as per Section 153A read with Section 143(3) of the Act. 13. The Ld. Authorised Representative for the Assessee has challenged the satisfaction recorded for the reasons that the assessing officer of the assessee (who is also the assessing officer of the Company) had, after recording satisfaction on 03.10.2017, raised queries and sought for explanation from the Company about the jewellery seized and this, according to the Ld. Authorised Representative for the Assessee, showed that the assessing officer of the Assessee did not form requisite satisfaction in terms of Section 153C of the Act. In our view, even though the same assessing officer has recorded satisfaction and raised such query it cannot be concluded that satisfaction is not proper merely on account of such query being raised. The Revenue cannot be curtained from making enquiries since initial satisfaction has to culminate into final determination. The expression „bearing on determination of total income‟ cannot be interpreted mean „taxation of total income‟. Also the final determination cannot make the initial satisfaction arrived at by the Assessing Officer at the threshold valid or invalid. Accordingly, we reject the contention raised on behalf of Assessee that the satisfaction recorded before initiating proceedings under Section 153C of the Act was not proper on this count. 14. The scheme of assessment/reassessment contained in Section 153C/153A of the Act is completely different from scheme of assessment/reassessment contained under Section 147 of the Act. The non-obstante clause contained in 153C/153A clearly provides that assessment/reassessment therein is not bound by ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 13 the procedural requirements contained in Section 139, 147, 148, 149, 151 and 153 of the Act. Further, to initiate assessment/reassessment proceedings under Section 147 of the Act the Assessing Officer must have „reasons to believe‟ that „income chargeable to tax‟ has escaped assessment whereas there is no such requirement under Section 153C/153A of the Act. For the purpose of Section 153C of the Act, the Assessing Officer is required to the satisfied that books of accounts, documents or asset seized have a „bearing on the determination of total income‟. For Section 153A of the Act no such satisfaction is required. Section 153A of the Act provides that where a search is initiated under Section 132 of the Act the assessing officer shall issue notice and thereafter, assess/re-assess the total income of for the specified assessment years. Since scheme assessment/reassessment under Section 153A/153C of the Act is different from the one contained in Section 147 of the Act, the judicial precedents rendered in the context of Section 147 of the Act cannot, in our view, be applied for interpretation of provisions contained in Section 153A/153C of the Act. 15. During the course of hearing, the Ld. Authorised Representative for the Assessee had placed reliance on the judgment of the Hon‟ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. 331 ITR 236, wherein it has been held that if after issuing a notice under Section 148 of the Act, the assessing officer holds that the income in relation to which he had formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it was not open to the assessing officer independently to assess some other income. Relying upon the aforesaid judgment, the Ld. Authorised Representative for the Assessee had contended that no addition could have been made ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 14 in the hands of the Assessee in the assessment order passed under Section 153C/143(3) of the Act as no addition has been made in the hands of the Assessee in respect of jewellery found/seized during the course of search in respect of which satisfaction was recorded in the satisfaction note dated 03.10.2017. We note that in the case of Jet Airways (I) Ltd. (supra), the Hon‟ble Bombay High Court had referred to Memorandum Explaining the Provisions of Finance (No. 2) Bill of 2009 for interpreting meaning of expression „and also‟ used in Section 147 of the Act and had concluded as under: “17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income "and also" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words "and also" are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147(1) as they stood after the amendment of 1-4-1989 continue to hold the field.” (Emphasis Supplied) ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 15 While accepting the contentions of the assessee in the above case, the Hon‟ble Bombay High Court had observed that to read the words „and also‟ as being „in alternative‟ would be to re-write the language used by the Parliament. In our view, in the case the contentions advanced on behalf of the Assessee in the present case are accepted, the same would amount to, in effect, re-writing the provisions of Section 153C/153A of the Act as explained hereinafter. The provisions of Section 153C/153A of the Act are not couched in the same language as the provisions contained in Section 147 of the Act. The words „and also‟ are not present in Section 153C of the Act. We are, therefore, not persuaded to apply the ratio of the judgment given by the Hon‟ble Bombay High Court in the case of Jet Airways (I) Ltd. (supra) while interpreting of Section 147 of the Act to the facts of the present case where assessment has been framed under Section 153C read with Section 143(3) of the Act. The contention raised on behalf of the Assessee that no addition can be made in assessment framed under Section 153C of the Act where no addition has been made qua the item for which the satisfaction under Section 153C of the Act was recorded (i.e., jewellery) by placing reliance on the judgment of the Hon‟ble Bombay High Court in the case of Jet Airways (I) Ltd. (supra) is, therefore, rejected. 16. During the course of the hearing, the Learned Authorised Representative for the Appellant had, relying upon paragraph 18 of the judgment of the Hon‟ble Supreme Court in the case of Sinhgad Technical Education Society (Supra), contended that since the Assessing Officer, at the stage of recording ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 16 satisfaction mandated by Section 153C of the Act, had not established co-relation between the incriminating material and relevant assessment year, the satisfaction was liable to be quashed. We note that the expression „incriminating material‟ has not been used in Section 153C of the Act. In our humble view, while examining the scope of additions that can be made in case of completed/un-abated assessments, the Hon‟ble Supreme Court as well as the Hon‟ble Jurisdictional Bombay High Court have established a balance between the arbitrary exercise of power by the Assessing Officer on one hand and scope of power of the Revenue to bring to tax undisclosed income on the other hand as It has been held by the Hon‟ble Court(s) that, in case of completed or un-abated assessment, in absence of incriminating material found during the course of search action pertaining to an assessment year, no additions could be made for such assessment year. The Hon‟ble Supreme Court had, in the case of CIT-III, Pune Vs. Sinhgad Technical Education Society: [2017] 397 ITR 344 (SC) has held as under: “18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 17 same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy.” In the above case, the incriminating material seized during the search pertained to particular assessment years. There was a clear factual finding by the Tribunal that the incriminating material belonged to Assessment Year 2004-05 and thereafter. Taking note of the aforesaid factual finding by the Tribunal, the Hon‟ble Supreme Court concluded that since the incriminating documents did not pertain to four assessment years, no addition could be made in these four assessment years. While it is one thing to contend that the incriminating material pertained to, say, assessment year-x and therefore, in absence of any other incriminating material no additions could be made in assessment year-y, whereas it is entirely different to contend that in case the incriminating material found during search could not be co-related with any specific assessment year at the time of recording satisfaction under Section 153C of the Act, the recording of satisfaction and the subsequent search assessment proceedings and the ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 18 assessment order must be quashed as being bad in law. While the former contention is supported by the judgment of the Hon‟ble Supreme Court in the case of Sinhgad Technical Education Society (supra), the latter contention does not find any place/support in the aforesaid judgment of the Apex Court. In our view, accepting the contention of the Assessee would lead to curtailing the search assessment at the very threshold, thus, blocking the Revenue from entering into inquiry at the stage of initiation of search proceedings, whereas the Hon‟ble Supreme Court has granted relief to the assessee at the stage of culmination of assessment proceedings where the Revenue had, even after making post- search inquiries and completion of the assessment proceedings, failed to establish the link between the incriminating material and the assessment year in which additions were made. 17. Similarly, the Hon‟ble Bombay High Court in the case of CIT-II, Thane Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd: [2015] 374 ITR 645 (Bombay) has held that no additions can be made in respect of assessments which have become final if no incriminating material is found during search pertaining to the same. 18. We note that the Assessee has, in Ground No. 3 & 3.1 of the Appeal, challenged the additions on the ground that there was no incriminating material. However, the CIT(A) has in paragraph 6.5 of order, dated 29.03.2019, noted that there was incriminating material and prior to operation of the last prohibitory order to the search action the issue relating to capital gain/loss was examined by the Investigation Wing and ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 19 statement of the Assessee and his wife was recorded on oath. Accordingly, a clarification was sought from the Learned Departmental Representative about the incriminating material found during the course of search. In response thereto, the Learned Departmental Representative placed on record the statements of the Assessee recorded under Section 132(4) of the Act during the course of the search action containing reply of the Assessee to 58 questions. He submitted that the aforesaid statement and the jewelry seized during the search constituted sufficient incriminating material for making additions in the hands of the Assessee. Taking us through question No. 16, 17, 48, 49, 50, 51 and 53 and the reply given by the Assessee, the Learned Departmental Representative submitted that specific queries regarding jewellery found during search, capital gains arising from sale of plot at Pune, income arising from sale of shares in off-market transaction to Mr. Viren Gandhi, Chartered Accountant and share transaction carried by the portfolio managers were put to the Assessee which constituted incriminating material and formed the subject matter of additions made by the Assessing Officer for various assessment years. Per contra, the Learned Authorised Representative for the Assessee submitted that a statement does not become incriminating merely because of the questions posed. It is the reply to the questions posed which has to be considered for determining whether there is anything incriminating in the statement recorded. He asserted that there was nothing incriminating in the replies given by the Assessee. He vehemently contended that there was no incriminating material to support the additions made ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 20 by the Assessing Officer and highlighted the fact that no additions were made in the hands of the Assessee in relation to jewellery found during the course of search and therefore, he submitted that the additions made by the Assessing Officer be deleted. 19. We have given thoughtful consideration to the rival contentions regarding the existence of incriminating material. In our view, a statement cannot be considered to be incriminating merely on the basis of questions posed. The questions posed and the reply given are to be considered together to examine whether the statement contains any incriminating material. We have perused the statement of the Assessee recorded under Section 132(4) of the Act including Questions No. 16, 17, 48, 49, 50, 51 and 53 along with the reply given by the Assessee. We are of the considered view, that the aforesaid statement does not contain anything incriminating. We have also perused the assessment order and the same neither refers nor allude to any incriminating material. The assessment before us is concluded/un-abated assessment, and therefore, no additions could have been made in the absence of incriminating material. Therefore, in view of the facts and circumstances of the present case and respectfully following the judgment of the Hon‟ble Supreme Court in the case of Sinhgad Technical Education Society (supra), and the judgment of the Hon‟ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), in absence of any incriminating material, we set aside the order passed by the CIT(A) and delete all the additions made by the Assessing Officer in the Assessment Order, dated 27.12.2017, passed under Section 153C read ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 21 with Section 143(3) of the Act for the Assessment Year 2010- 11. 20. In view of the above, Ground No. 1, 1.1 and 2 raised by the Appellant are dismissed, Ground No. 3 and 3.1 are allowed and Ground No. 4, 4.1 and 4.2 are disposed off as being infructuous. Ground No. 5 pertaining to levy of interest under Section 234B/234C of the Act is disposed off as being consequential while Ground No. 6 pertaining to levy of penalty under Section 271(1)(c) of the Act is disposed off as being premature. 21. In result, appeal filed by the Assessee (i.e. ITA No. 3924/Mum/2019) (Assessment Year 2010-11) is partly allowed. ITA No. 3925, 3926, 3927 & 3928/Mum/2019 (Assessment Year 2011-12 to 2014-15) filed by the Assessee (Dr. Aniruddha Narayan Malpani) 22. Since, identical grounds arising in identical factual matrix have been raised by the Assessee in appeals for the Assessment Year 2011-12 to 2014-15 (ITA No. 3925 - 3928/Mum/2019), our findings/conclusion in appeal for the Assessment Year 2010-11 shall apply mutatis mutandis to the respective grounds raised in these appeals. Accordingly, the common order, dated 29.03.2019, passed by the CIT(A) for the Assessment Years 2011-12 to 2014-15 is, therefore, set aside and the additions made by the Assessing Officer in the respective assessment order, dated 27.12.2017, for each of the aforesaid assessment years passed under Section 153C read with Section 143(3) of the Act are deleted. In view of the aforesaid, appeals filed by Dr. Aniruddha Narayan Malpani for ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 22 Assessment Year 2011-12 to 2014-15 (ITA No. 3925, 3926, 3927 & 3928/Mum/2019) are partly allowed. ITA No. 3917 to 3921/Mum/2019 (Assessment Year 2010-11 to 2014-15) filed by the Assessee (Dr. Anjali Aniruddha Malpani) 23. Similarly, in identical facts and on identical line of reasoning, the additions made in the hands of Anjali Aniruddha Malpani by the Assessing Officer for the Assessment Year 2010-11 to 2014-15 vide separate assessment orders passed on 27.12.2017 under Section 153C read with Section 143(3) of the Act are also deleted in absence of any incriminating material found during the course of search. In view of the aforesaid, appeals filed by Dr. Anjali Aniruddha Malpani for Assessment Year 2010-11 to 2014-15 (ITA No. 3917, 3918, 3919, 3920 & 3921/Mum/2019) are partly allowed. ITA No. 4120, 4122 & 4123/Mum/2019 (Assessment Year 2011-12, 2013-14 & 2014-15) filed by the Revenue in the case of Dr. Aniruddha Narayan Malpani, and ITA No. 4114/Mum/2019 (Assessment Year 2010-11) filed by the Revenue in the case of Dr. Anjali Aniruddha Malpani 24. We have deleted the additions made by the Assessing Officer and therefore, the question of taxability of income as long/short term capital gains or business income does not survive. Accordingly, all the cross appeals preferred by the Revenue (ITA No. 4120, 4122, 4123 & 4114/Mum/2019) are disposed off as being infructuous. 25. In result, the 5 appeals preferred by Aniruddha Narayan Malpani, (ITA No. 3924 to 3928/Mum/2019/Mum/2019) and 5 appeals preferred by Dr. Anjali Aniruddha Malpani (ITA No. ITA Nos. 3917-3921/Mum/2019, ITA Nos. 3924-3928/Mum/2019, ITA Nos. 4120, 4122, 4123 & 4114/Mum/2019 23 3917 to 3921/Mum/2019) are partly allowed. Whereas 4 appeals preferred by the Revenue (ITA No. 4120/Mum/2019, ITA No. 4122/Mum/2019, ITA No. 4123/Mum/2019 and ITA No. 4114/Mum/2019) are dismissed. Order pronounced on 30.09.2022. Sd/- Sd/- (Pramod Kumar) Vice President (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 30.09.2022 Alindra, PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदिकरण, म ुंबई / ITAT, Mumbai